NIM07060 | Class 1 NICs: Payments made under employment legislation: Earnings period to be used in assessing NICs liability: General

Regulations 2, 5(a) and 8 Social Security (Contributions) Regulations 2001

Payments made under:

• a reinstatement order (see NIM07020 – NIM07021)

• a re-engagement order (see NIM07030 – NIM07031)

• an order for the continuation of a contract of employment (see NIM07040 onwards)

• a protective award (see NIM07050 onwards)

have their own specific earnings periods.

For details of the earnings periods to be used for payments made under:

• any of the above orders, see NIM07061

• a protective award, see NIM07062.

As payments made under any of the above orders or a protective award have their own unique earnings period, any such payment must not be aggregated with any other payment of earnings made at the same time. But this is subject to the following exception:

Exception payment made to a director

The only exception to the rule mentioned in the previous paragraph is where the payment made under:

• any of the above orders; or

• a protective award

is paid to a director.

This exception is provided for in regulation 2 Social Security (Contributions) Regulations 2001.

In such cases:

• add the amount of the payment made under any of the above orders or a protective award to the amount of the other earnings, and assess the amount of NICs on the total amount; and

• use the earnings period which is being used to assess NICs on other payments made to the director ie, an annual earnings period or a pro-rata annual earnings period (regulation 8 Social Security (Contributions) Regulations 2001; see NIM12021 onwards).